Your business exists for two main purposes: to fill a customer need and to be profitable. As it turns out, these two goals can be attained collectively by investing into customer experience. Research confirms, time and time again, that organizations that have better customer service are profitable. A study conducted by Temkin Group found a moderate increase in customer experience warranted an average revenue increase of $823 million over 3 years for a company with an average $1 billion annual revenue.
The capitalization rate, sometimes referred to simply as the “cap rate,” is a concept that’s fundamental for anyone buying into real estate for commercial purposes. The cap rate is used in real estate investing to provide a clear ROI of properties. It’s typically depicted as a percentage and its value can vary over time.
Cutting costs is one effective way for property management companies to turn revenue into profits, but eventually, they’ll run out of costs that can realistically be cut. Another option can be to raise prices but at a certain point, raising prices can alienate customers and increase churn. A third strategy for increasing profitability is to monetize additional services provided by your organization. This method grows revenue without a significant increase to operating costs.
Maintenance is inevitable in the property management industry and every company takes a different approach to managing areas that fall within the maintenance realm. All these elements that demand attention, require different skill sets to be managed effectively, which often results in partnering with contractors to do the job. However, contractors can be expensive and run up costs.
There are many key factors to a well-performing business and high profitability, what you may not know is your team is one of those key factors. A highly engaged team can help to keep customers loyal and profitability up, which is one reason it’s important to keep a focus on your employee experience as well as your customers. Training, opportunity for growth, and regular feedback (both positive or negative) are key investments in your team, that when executed effectively build trust, create respect, and grow your bottom line.
Research shows that pricing is the element of the marketing mix with the greatest impact on profitability, in one study a 5% price increase led to an average 22% increase in earnings. While it might seem obvious, your profitability depends heavily on your service fees and product pricing. If prices are not optimized, organizations often end up selling themselves short, cutting out the opportunity for profits. On the other hand, if prices are set too high, profits can be put in jeopardy due to overselling your value. Pricing is a delicate balance, so here are a few considerations for companies reviewing their rates.
When small to medium sized property management companies are looking to strengthen their industry foothold whether they’re just starting out or revaluating their strategy, businesses often have to choose between growth or profitability focus. Because of the crowded nature of the property management industry, selecting one or the other can be particularly daunting, so it’s important to think long and hard about the best option for your company.
To improve profitability, some people may elect to increase revenue sources by introducing additional products or services to their offering. To ensure revenue translates to true profitability, organizations must additionally reduce costs. Essentially, this process comes down to a careful evaluation of which business expenses must be incurred versus those that can be eliminated. In an effort to cut costs, organizations often leverage an ERP to reduce costs across their operations.
Profitability is essential to businesses. It’s a marker of success and it can always be improved. The more profits your property management company can drive, the more flexibility your business is capable of and the more opportunities for expansion you will encounter. Knowing where you can make small tweaks or big changes to your operation can help you derive a strategy that will help keep your company not just financially stable but profitable and booming. Here are 5 tips and tricks for increasing your business’s profitability.
There are many metrics property management companies can use to pinpoint the value of their business, increase the profitability of their service, and decrease costs to their operation. Leveraging software that facilitate these measurements or regularly run property management reports allow organizations to actively improve or maintain profitability and increase cashflow to continue to grow their business. Collecting and analyzing data are key element of planning so businesses can stay financially healthy. If you operate a property management company and intend on growing, here are some strategies to effectively measure your profitability.